Recent Posts

By now, it is no secret that there has never been a better time
to by a home. Homes are currently being bought for a fraction of
the cost compared to what they would have been listed for before
the recession and mortgage interest rates show no signs of
significantly rising in the months to come.

In a new blog post from KCM, the author points out that although the
economy was exploding about a decade ago, many individuals who
dreamed of one day owning a vacation or retirement home found it
out of reach because of sky-high housing prices. By taking a
second look at the prices of the same homes today though, which
have dropped by over 30 percent in some markets, that second
dream home now seems much more financially feasible.

For example, a home that was listed for $500,000 in 2006 could
easily be listed now for $400,000 or less. At the same time, a
6.52 percent interest rate for a 30-year mortgage in 2006 could
not be compared to a mortgage rate of only 3.59 percent. Finally,
monthly P&I payments dropped from $3,166.99 in 2006 to
$1,816.33 per month for 2012. You don't have to be a math genius
to see the tremendous amount of money that can be saved with
buying at today's home prices.

Before you make the jump in putting in an offer on your future
vacation or retirement home though, there are a few things to
keep in mind.

First of all, it is recommended that you have at least 12 months
of expenses in an emergency savings fund. This is because whether
you choose to buy another property and move in right away or buy
a second home and rent it out for the time being, you will need
extra money to cover unexpected upkeep and might need to use a
portion of the money towards the home if you go several months at
a time without housing any renters.

As a general rule of thumb, it is also important to maintain a
good credit rating. CA Hagy of
Best Cash Cow explains that just because you
once qualified for a mortgage of the home you currently live in
doesn't mean that you will easily qualify for a new mortgage now.
As a result of the housing crisis, there are more credit
restrictions and fewer people are now qualifying for
mortgages.

Financial experts also recommend buying a second home five to ten
years before you stop working. A number of retirees are unaware
of this, but it becomes more difficult to obtain a mortgage once
there is no longer an income to factor in to the home buying
process.

Finally, according to Bankrate, one of the best ways to pursue the
purchase of a vacation or retirement home is to pay in cash. We
understand that this might not be an option for all homeowners so
if other options must be pursued, it is recommended that the
property be financed as a second home rather than as an
investment property. This will allow for better options of
interest rates, qualification guidelines, and down payment
requirements.